Oil prices dropped in Asia on Monday as major western powers and Iran are soon going to sight nuclear deal that would raise the sanctions. This is also witnessed in the light of Tehran’s crude exports returning to global markets.
According to a forecast by the analysts at the International Energy Agency (IEA), slower world oil demand in the next year is also weighing on the market.
Brent crude was slashed down by 96 cents to $57.77 a barrel and West Texas Intermediate US benchmark for August was down 86 cents to $51.88 in late-morning trade.
Iranian President, Hassan Rouhani said in Tehran on Sunday that Iran needs to reach a peak now. They are very close to achieving their goals.
Laurent Fabius, French Foreign Minister also said Iran is finally entering the final phase of the marathon negotiations.
The West suspects that Iranians are putting in the efforts to build an atomic bomb. This will result in the lifting of punishing the economic sanctions and allowing the country to resume oil exports.
Additional Iranian oil will only add to a supply glut that has depressed prices.
According to the reports released this morning, a comprehensive in-principle agreement has been reached over the primary issues. This is accounted with technical considerations remaining unresolved, added Nicholas Teo, a market analyst at CMC Markets in Singapore. This fact may once again move the needle for crude oil, he added in a market commentary.
As per the IEA’s forecast, the global oil demand would grow by 1.2 million barrels per day in the next year. It would be slower than the 1.4 million target projected this year. The global output would grow by 550,000 barrels a day in June (96.6 million) barrels, added IEA.
This is up on average by 3.1 million barrels as what was seen a year ago. The production has boosted from the Organization of the Petroleum Exporting Countries. OPEC output increased in June to a three-year high of 31.7 million barrels, added IEA.